Tax Buoyancy in OECD Countries

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By how much will faster economic growth boost government revenue? This paper estimates short- and long-run tax buoyancy in OECD countries between 1965 and 2012. We find that, for aggregate tax revenues, short-run tax buoyancy does not significantly differ from one in the majority of countries; yet, it has increased since the late 1980s so that tax systems have generally become better automatic stabilizers. Long-run buoyancy exceeds one in about half of the OECD countries, implying that GDP growth has helped improve structural fiscal deficit ratios. Corporate taxes are by far the most buoyant, while excises and property taxes are the least buoyant. For personal income taxes and social contributions, short- and long-run buoyancies have declined since the late 1980s and have, on average, become lower than one.This paper estimates long and short-run tax buoyancy for OECD countries during
the period 1965-2012. ... corporate income taxes (CIT), goods and services taxes
(GST), excise taxes, recurrent taxes on immovable properties and social ... In
particular, they estimate the impact of cyclical budget components to the output
gap in two steps: first by estimating ... Tax buoyancy differs from the so-called
macroeconomic tax elasticity, which is similar but corrects revenue data for
changes in taxanbsp;...